Per Se ends tipping in favor of service charge

[Bux]

. . . . 

Personally, I won't go below the 15% line unless it was truly bad service. But I will go to 25% for exceptional service (as I did at Per Se). But now it will never cost me more than 20% at Per Se. Who loses?

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Don't be silly. In France, where service is included, it's not uncommon to leave a few coins on the bar or 5% at a restauraurant. Some people leave 10% at a good restaurant and that's in addition to the included service. Tips are always in cash, never added to the credit card amount. My guess is that a minimum service charge will not decrease the take for waiters in the long run.

Rich, you refer several times to your experience and in a way that implies it's more extensive, or at least more reliable than the independent studies. Could you explain why? I find the studies reasonably reliable.

[SobaAddict70]

Something that might be of interest...

In this, the world's most generous nation of tippers, most restaurants don't even offer service as good as at the average McDonald's. While it lacks style, service at McDonald's is far more reliable than the service at the average upper-middle-market restaurant. This is not because the employees of McDonald's are brilliant at their jobs - it's because they are well-trained and subject to rigorous supervision.

And come to think of it, at McDonald's there is no tipping.

On Tipping (Steven A. Shaw)

Yes, an Op-Ed piece in tomorrow's New York Times, courtesy of our very own El Gordo.

Soba

[Bux]

Per se calls it a service charge: "Beginning September 1st, in lieu of gratuity, per se will be adding a 20% service charge to all guest checks."

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A couple of questions and points to make.

Does NY State/City law provide for 'minimum' state wage law for service personel or ist it like MA where service personel does NOT receive state minimum wage?

. . . .

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"$3.85 per hour in New York City" according to Fat Guy's opinion piece in the NY Times Tipped Off.

"Over time, as in any service-oriented business, waiters loyal to the restaurant will perform better and make customers happier than waiters loyal only to themselves." Perhaps, but the question remains, will the wait staff feel more loyal to a restaurant that has greater control over their tips, one that leaves tipping a more free market arrangement, or one that pays them a living wage regardless of how busy the restaurant is and how much they upsell the diner? When I'm enjoying the food, I'm more likely to order dessert. It's the kitchen staff that's more likely to be getting me to increase my tab. Why aren't they sharing in the service charge? Keller may indeed have a better way, but will it be adapted by other restaurants? I've watched too many inferior plans, systems and projects outsell their superior rivals. PT Barnum and HL Menken knew that.

[Fat Guy]

This is the US Department of Labor's table of minimum cash wages after tip credit by state:

http://www.dol.gov/esa/programs/whd/state/tipped.htm

The minimum wage in New York is $6 per hour, and the maximum tip credit is $2.15 per hour. That means tipped employees can be paid an adjusted minimum wage of $3.85 per hour, assuming they make at least an average of $2.15 per hour in tips.

There are various ways to look at this arrangement. The economics of wages are too often oversimplified. However, it would not be a stretch to say that tips paid by customers are subsidizing restaurants' abilities to pay their employees less than the minimum wage.

[BigboyDan]

A manditory service charge is not a gratuity. What, am I to get a set a level of service for a $100 tab will be less in quality than that of what I will receive for a tab of $200?

Sucker born every minute...

[ingridsf]

Can't tell if people already know about it but here's the link to Fat Guy's op-ed about tipping, "Tipped Off." http://www.nytimes.com/2005/08/10/opinion/10shaw.html

Sing it, Fat Guy! My best friend who put up with things like being "tipped" with twelve pennies in a water pitcher because the "guests" weren't satisfied with their pizza toppings thanks you.

We'll get seriously better service when we take these workers seriously enough to provide the same consistent compensation other restaurant staff receive. If they don't do a good job, treat them like any other employee: tell them to get it together or else.

[Fat Guy]

The service charge system is an improvement over the gratuity system, but it's not the true solution. If you list all the things that are wrong with the gratuity system, the service charge addresses some but not others. For example, the service charge still encourages shallow upselling and it still presents service as a separate category rather than simply part of a whole. One thing at a time, though. You're not going to see restaurants switching from the gratuity system to a true wage system overnight, and you may not see it ever.

[FabulousFoodBabe]

To oppose tipping, it seems, is to be anticapitalist, and maybe even a little French.

Hah! Beautifully said. And now, it seems that Per Se will give the kitchen some of that service charge -- interesting.

[GordonCooks]

Per Se (or any other restaurant of that caliber) using a service charge won't affect my decision to dine there one bit - due to the fact I drink a little too much wine, I'll be saving money.

[Andrew Fenton]

Per se calls it a service charge: "Beginning September 1st, in lieu of gratuity, per se will be adding a 20% service charge to all guest checks."

My apologies if this has been answered already, but why not simply raise prices by 20% and have a "service included" note on the menu? I have no problem with including service in the cost of the meal, but I'd prefer it if the restaurant were up-front about it.

[Ruth]

Per Se (or any other restaurant of that caliber) using a service charge won't affect my decision to dine there one bit - due to the fact I drink a little too much wine, I'll be saving money.

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How would you be saving money? Presumably the service charge will be on the wine too. Most people who buy bottles in the hundreds of dollars do not normally tip 20% on the entire cost of the wine

[MichaelB]

Per se calls it a service charge: "Beginning September 1st, in lieu of gratuity, per se will be adding a 20% service charge to all guest checks."

My apologies if this has been answered already, but why not simply raise prices by 20% and have a "service included" note on the menu? I have no problem with including service in the cost of the meal, but I'd prefer it if the restaurant were up-front about it.

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I am not sure about the law in New York but can guess. In most states, there is no sales tax on a separately stated labor or service charge. So, you pay sales tax on the food drink and service is 20% of the food and drink charge. If the restaurant raises prices by 20%, you pay another 8.5% (NYC rate, IIRC) on the 20% -- or an additional 1.7% on the basic food and drink charges -- in tax.

[Andy Lynes]

Okay -- I'm addicted to Page Six. I feel kind of dirty saying it, but there it is. 

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Excuse my ignorance, but what is Page Six? Thanks.

[rich]

. . . . 

Personally, I won't go below the 15% line unless it was truly bad service. But I will go to 25% for exceptional service (as I did at Per Se). But now it will never cost me more than 20% at Per Se. Who loses?

←

Don't be silly. In France, where service is included, it's not uncommon to leave a few coins on the bar or 5% at a restauraurant. Some people leave 10% at a good restaurant and that's in addition to the included service. Tips are always in cash, never added to the credit card amount. My guess is that a minimum service charge will not decrease the take for waiters in the long run.

Rich, you refer several times to your experience and in a way that implies it's more extensive, or at least more reliable than the independent studies. Could you explain why? I find the studies reasonably reliable.

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Believe me Bux, if I'm being silly, you'll be the first to know - I promise. I'll even e-mail you privately if that would help your cognitive abilities.

What they do in France has absolutely no relation to what will occur here. I think that's clearly evident from the political and socio-economic climate in both countries.

While there may be some people who will throw a few dollars extra into the pot, I doubt many will, especially at 20% of the total bill including wine. At Per Se's prices, it would be rare that more than a few would leave more.

I've always found personal experience to be more reliable than studies. For one, the methodology (which may be flawed) is unknown except to the study's sponsors. Secondly, there are always built-in prejudices with studies - the same as with political polls. Finally, when studies are done where cash is involved they are notoriously inaccurate. Anyone who has taken Economics 101 understands that. People are not completely "up-front" when speaking about cash. And cash is left for tips - at least occasionally.

When I worked as a waiter, I witnessed certain people making substantially more than others and it wasn't for one night or one week - it was over several years. Obviously, the study or studies never included the restaurants where I worked.

So to answer you're opening query - no I wasn't being silly, just factual.

I hope this helps in solving your dilemma.

[Fat Guy]

A follow-up piece in the Post today indicates that the kitchen staff will be involved in the service charge pool. If so, this is a feature of Keller's plan that exceeds a typical service charge plan (such as the common practice of a fixed service charge for parties of six or more). The tension between the back of the house and the front of the house in restaurants is counterproductive and unnecessary. Keller's plan, if the Post is correct, is a step towards putting everybody on the same team.

Andy, "Page Six" is the Post's gossip page (it is rarely actually on page six), but it's really more than that. It's a fixture of the New York cultural landscape, and finds its way into more conversations than anybody is comfortable with.

MichaelB, I believe that's incorrect. My understanding is that under New York State law a service charge is subject to state sales tax. However, someone who is actually involved in restaurant accounting could probably give a more authoritative answer.

[Busboy]

Per Se (or any other restaurant of that caliber) using a service charge won't affect my decision to dine there one bit - due to the fact I drink a little too much wine, I'll be saving money.

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How would you be saving money? Presumably the service charge will be on the wine too. Most people who buy bottles in the hundreds of dollars do not normally tip 20% on the entire cost of the wine

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I can't speak for Gordon, but when I get a bellyful of wine, and I've having a good time, I tend to get generous in my tipping, pushing well past the 20% line on occasion.

[Fat Guy]

I've always found personal experience to be more reliable than studies. For one, the methodology (which may be flawed) is unknown except to the study's sponsors. Secondly, there are always built-in prejudices with studies - the same as with political polls. Finally, when studies are done where cash is involved they are notoriously inaccurate. Anyone who has taken Economics 101 understands that. People are not completely "up-front" when speaking about cash. And cash is left for tips - at least occasionally.

When I worked as a waiter, I witnessed certain people making substantially more than others and it wasn't for one night or one week - it was over several years. Obviously, the study or studies never included the restaurants where I worked.

←

Lots of people believe their personal experience is more accurate than scientifically conducted studies. They're usually wrong. In addition, any serious study makes its methodology public and, while there may be some built in biases, good studies attempt to control for those biases and are in any event a lot less biased than anecdotal reports from individuals. I also would not, in a study of consumer tipping behavior, care very much about what waiters think. I would care about what consumers think. A waiter may assume he get more money because he gives great service; in reality it may just be because he's handsome. And they, unlike waiters, have little incentive to lie about cash matters.

Have a look at Michael Lynn's web page. He's the foremost authority on consumer tipping behavior, and has done dozens of studies and meta-studies. There's a ton of interesting information assembled on his pages. There's also a good distillation of his work in a Cornell Chronicle story:

Asked to sum up his findings on the subject, Lynn offered these tips on tipping:

1) Tip percentages are only weakly related to customers' ratings of service quality in restaurant settings. This finding suggests that restaurant tips are poor measures of customer satisfaction with service and that they provide weak incentives for delivering good service.

2) Nonverbal server behaviors that communicate liking for the customer, such as lightly touching the customer and crouching next to the table when interacting with the customer, substantially increase the tips restaurant servers receive. These findings suggest that managers can significantly increase their employees' compensation without adversely affecting the company's bottom line by encouraging their servers to touch customers and to display other nonverbal signs of liking for the customer.

3) Tipping is more prevalent in countries whose populations are achievement-oriented, status-seeking, extroverted, neurotic and tenderhearted. These findings suggest that tipping exists to serve several functions, i.e., to increase the social attention/esteem that servers give customers, to reduce consumers' anxieties about being served by others and to allow consumers to financially help servers.

[FabulousFoodBabe]

Okay -- I'm addicted to Page Six. I feel kind of dirty saying it, but there it is. 

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Excuse my ignorance, but what is Page Six? Thanks.

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It's the gossip column in the New York Post. Shame on me. Lookie Here

-Fabby,

the truly ignorant one.

[GordonCooks]

Per Se (or any other restaurant of that caliber) using a service charge won't affect my decision to dine there one bit - due to the fact I drink a little too much wine, I'll be saving money.

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How would you be saving money? Presumably the service charge will be on the wine too. Most people who buy bottles in the hundreds of dollars do not normally tip 20% on the entire cost of the wine

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Unfortunatley - drunken overtipping has been the bane of my existence and me quite popular at the same time Most of my days are spent negotiating over tenths of pennies - the last thing I want to do when I'm dining is do math in my head.

[Fat Guy]

Ruth, are you sure that "Most people who buy bottles in the hundreds of dollars do not normally tip 20% on the entire cost of the wine"? I haven't seen any actual statistics on this, but anecdotally I've heard that most people do tip their normal 18-20% on the entire bill, regardless of the cost of wine. Which of course is just one of many reasons it makes no sense for tips or the cost of service to be related to the bill. While it may require more service to serve a $300 bottle of wine than a $30 one (they'll likely decant, bring out special stemware, etc.), there's no more service in a $3,000 bottle than in a $300 one. Moreover, sommeliers are often part of management and don't share in the tips at all. This is not peculiar to wine, however. It requires less labor to cook a $120 lobster than it does to make a $12 steak tartare appetizer. The cost of an item has little to do with the amount of service it requires. It's just as hard to serve empty plates as it is to serve plates of foie gras and caviar.

[Tess]

Great Op-Ed piece!

I think this part is really crucial:

That is because those who wish to guarantee their long-term financial security sacrifice a little bit of quick cash for longer-term benefits like health insurance, retirement plans and vacation pay. But, of course, most servers see themselves as transient employees - waiting tables before moving on to bigger and better things.

I think working for benefits does seem really unattractive when you're in your 20s-early 30s and as long as you're relatively healthy. When I first started working, I couldn't believe how tiny my take-home pay seemed once you took out insurance and TIAA-CREF. It seemed like kind of a paternalistic thing: they were protecting me from myself. Maybe it still is, in fact. And don't get me started on Social Security. Still, having a job with no benefits puts you in a very bad position as time goes on and I think servers ought to have at least the option of affordable insurance and retirement plans-- not the bogus ones where employers say they offer them but if you want them you have to pay through the nose.

[rich]

I've always found personal experience to be more reliable than studies. For one, the methodology (which may be flawed) is unknown except to the study's sponsors. Secondly, there are always built-in prejudices with studies - the same as with political polls. Finally, when studies are done where cash is involved they are notoriously inaccurate. Anyone who has taken Economics 101 understands that. People are not completely "up-front" when speaking about cash. And cash is left for tips - at least occasionally.

When I worked as a waiter, I witnessed certain people making substantially more than others and it wasn't for one night or one week - it was over several years. Obviously, the study or studies never included the restaurants where I worked.

←

Lots of people believe their personal experience is more accurate than scientifically conducted studies. They're usually wrong. In addition, any serious study makes its methodology public and, while there may be some built in biases, good studies attempt to control for those biases and are in any event a lot less biased than anecdotal reports from individuals. I also would not, in a study of consumer tipping behavior, care very much about what waiters think. I would care about what consumers think. A waiter may assume he get more money because he gives great service; in reality it may just be because he's handsome. And they, unlike waiters, have little incentive to lie about cash matters.

Have a look at Michael Lynn's web page. He's the foremost authority on consumer tipping behavior, and has done dozens of studies and meta-studies. There's a ton of interesting information assembled on his pages. There's also a good distillation of his work in a Cornell Chronicle story:

Asked to sum up his findings on the subject, Lynn offered these tips on tipping:

1) Tip percentages are only weakly related to customers' ratings of service quality in restaurant settings. This finding suggests that restaurant tips are poor measures of customer satisfaction with service and that they provide weak incentives for delivering good service.

2) Nonverbal server behaviors that communicate liking for the customer, such as lightly touching the customer and crouching next to the table when interacting with the customer, substantially increase the tips restaurant servers receive. These findings suggest that managers can significantly increase their employees' compensation without adversely affecting the company's bottom line by encouraging their servers to touch customers and to display other nonverbal signs of liking for the customer.

3) Tipping is more prevalent in countries whose populations are achievement-oriented, status-seeking, extroverted, neurotic and tenderhearted. These findings suggest that tipping exists to serve several functions, i.e., to increase the social attention/esteem that servers give customers, to reduce consumers' anxieties about being served by others and to allow consumers to financially help servers.

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To answer the first part, I don't believe my experiences were observed in a vacuum - if they were it was a very large vacuum. If I am wrong about good service equaling better tips, then the ten years I worked as a waiter to make some extra money while going to school were a complete waste. I always made more money and I guess I should have just been lazy - I would have made the same and not worked nearly as hard.

Secondly, I'm assuming studies would include information from waiters and the public. If they chose one or the other, the study would have no validity at all. When you say a waiter/waitress may have gotten a good tip because they were good looking and not because they provided good service, that's seems a bit over the top. Yes I'm sure there are people who would do this, but it's rare (unless as you said in an earlier post that the promise of sex was suggested) and certainly wouldn't be significant over time. And I think the public would lie about cash matters as much as the waiters. When being interviewed by someone about tipping, you would never want to come across as petty or cheap - or want people to know something about you that is considered private (just as waiters would never admit to providing poor service). That's simple human nature. Notice no one here admits to giving 10%, but we all say we give 15-20% or more. The same can be said for political exit polls, people say things that make them appear better to the eyes of the interviewer - the main reason why networks don't predict election outcomes as quickly as they once did.

I totally agree with Lynn's second and third conclusions. The second because part of being a good waiter is making the customers feel liked, respected and appreciated (and I did some of those things as a waiter). The third because it's the reason why you can't compare France and the United States with respect to tipping.

I totally disagree with one. It makes no sense. Think of it. If you went into a restaurant and had truly poor service by someone who had no incentive to provide better, would you tip 20%? I know I wouldn't. And I can say from MY ANCEDOTAL EXPERIENCE of ten years, that most customers don't either. I think this suggests that the surveyed people didn't want to come across poorly for whatever reason - probably just an ego thing.

Believe the studies if you will. I choose to accept reality.

[Busboy]

Steve -- Michael Lynn's studies look at a population of diners, each eating one meal, and correlate the "quality" of the experience (and elusive target, that) with the tip and finds the correlation between the two, weak.

How might that change if you examined a population of diners over many meals, and correletad the change in their perception of "quality" (still a tough thing to quantify, but less in this kind of study, if we assume people to be individually consistent) with the change in the tip. Even if there is little correlation latitudinally between a subjective judgement of quality and a subjective judgement of what an appropriate tip is, mightn't there be some longitudinal (clearly, I'm making up terms here) consistency, with tips moving up or down relative to the diner's norm, as service improves or declines? Keeping in mind that even a minor improvement -- from a 15% average to an 18% average, say, equals a significant increase in the server's take-home wage?

Or is tipping such an inelastic act that most peoples' tips vary insignificanly even as the quality of service changes?

Congrats on the piece!

[Fat Guy]

Charles, Lynn has done a lot of different studies and meta-studies including analyses of repeat customers and, I believe, addressed those points. As I recall, he has concluded that 25% of diners are inelastic tippers and that the other 75% are more likely to tip better on account of weather, looks, physical contact, gender, etc., than on account of good service. I'll try to dig out my full pile of research on tipping -- Lynn is not the only person to have examined the matter, but all the social research concludes pretty much the same things.

Rich, I hasten to add that Professor Lynn also has several years of experience as a waiter (in Austin, Texas). It's just that after being a waiter, he went ahead and got a Ph.D. in social psychology with a minor in statistics, philosophy and sociology, and has done more academic research on tipping than anybody else in the world. He doesn't appear to have any agendas -- I'm not sure I've ever seen him say he opposes or favors tipping. He just seems to find the whole issue interesting and worth of study.

[Toliver]

From the Op ed piece:

In addition, the practice of tip pooling, which is the norm in fine-dining restaurants and is becoming more common in every kind of restaurant above the level of a greasy spoon, has gutted whatever effect voting with your tip might have had on an individual waiter. In a perverse outcome, you are punishing the good waiters in the restaurant by not tipping the bad one.

So, thanks to tip pooling, I'm supposed to be guilted into paying out a 20% tip for bad service just so the good waiter (which I didn't get this time around ) is going to suffer because I'm not properly tipping the moron who poorly served me?

Think again, pal.

Not that I plan on eating at Per Se anytime soon but since I don't agree with the flat rate service charge I will take my dining dollars elsewhere.